Making Tax Digital

Making Tax Digital (MTD) is the next (and imminent) change to the way in which information is to be reported to HMRC in respect of self employed income – it will apply with effect from next April (2018).

Traditionally the annual accounts have been the basis on which accounting information is included and reported in the tax return. The intention is to replace this (or, at least, supplement it) with regular (quarterly/monthly) information to be filed digitally with HMRC. It is akin to RTI (Real Time Information) which deals with reporting employees pay on a weekly/monthly basis – extended to the self-employed. This regular digital reporting may remove the need for a tax return altogether (in due course).

The rules have yet to be finalised. The whole matter is up for consultation before the Government finally decides on its scope and implementation – whether it becomes mandatory or voluntary. Whichever it is to start with, inevitably it will become compulsory.

This note is not intended to tell the whole story (or, indeed, much of it). It is to raise continuing awareness, following our earlier posts.  Clients will be advised in due course how it affects them and what they may need to do about it.